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Ask Dave

Capital Gains

Chris owns some property that he's thinking of selling, in order to help pay off his mortgage. Dave thinks this is a no-brainer.

QUESTION: Chris owns a piece of property and he is considering selling it to pay off his own mortgage.  He would have a capital gain of about $120,000 and he owes $140,000 on his own house.  Should he sell the property?

You should not go into debt to invest, which is essentially what you’re doing here.  Sell the property.  You’ll pay some taxes, but you will be debt-free.  Then, take the house payment you used to have and invest it in good growth stock mutual funds or in real estate if you want to go that route again.